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Beating Purplebricks and YOPA at their own game (part 1)

Traditional High Street Estate Agency is doomed over
the next decade to slowly slip into a blackhole that is Purple-Yopa-bricks-world
…. that is unless Traditional High Street Estate Agency change the way it
portrays itself, markets itself and adds value to the home selling process.

Imagine a desert island, inhabited by
people with humble needs and plenty of resources. You won't find a hustling
economy there, because you need two things in order to have an economy: people
who want things, and a scarcity of things they want. Without scarcity, there's
no basis for an economy.

When there's too much of any product or
service, the value of that product or service drops like a stone. As we are
estate and letting agents, if our service can be produced at will and costs
little or nothing to create, it's not likely to be scarce, either. Think before
you dismiss that statement .. what does it need to put an additional
property on the market today? As along as you are on Zoopla/Rightmove, apart
from your time taking the pic, measuring up and typing the brochure – the only
external cost to an agent is the petrol to the listing, the ink in your pen, a
few sheets of A4 and a board erection.

That's the situation with estate and
letting agency today. Estate Agency is becoming abundant and cheap.

Number of Houses sold per
Estate dropped by 73.2% in 10 years

In 2004, there were 7,570 estate and
letting agent offices in the UK, BUT by 2014 that number had risen to 19,304.

Problem is, in 2004, those 7,570 offices
sold between them 1.78m properties meaning in 2004, the average number of sales
per estate agency branch per year was 235.13 per year.

However, in 2014, only 1.219m properties
sold between 19,304 agents, meaning the average number of sales per
estate agency branch now only stands at 63.14 properties a year .. a drop
of 73.2% .. and it will only get worse.

Estate Agency Fees

When I was an estate agent back in the
1990’s, I worked for one of the largest National estate agency brands, and the
average fee was around 1.8% to 1.9% + advertising and withdrawal fee. According to the conveyancing firm MyHomeMove, the average high-street estate agent fee is 1.3% today. I would say in
many places they would be lucky to get 1% at the moment.

There are many online / hybrid / kitchen
table / call centre estate agents, but the most notorious and well known of
them all, the Pantomime villain agent is Purplebricks.

Personally, I like Purplebricks. I know
a few of their senior management and as a national hybrid estate agent .. I
think the model is the best ‘hybrid’ or ‘online’ model out there.

Purplebricks are offering to sell a
persons house not for 1.3% (ie £3,800) or 1% (£3,000) … based UK average house price of £298k. Purplebricks are ever so slowly, virus like, inch by inch, step by step,
like Japanese knotweed, slowly creeping up and taking lots of little steps in
each of your markets, week by week , month by month taking more of a market
share.

Their offering of a sales fee of 0.26%,
(based on their fee of £798 and the UK average house price of £298k) starts to
look from the perspective of the house seller – very attractive.

Estate Agents have created
this problem themselves

There are too many estate agents and
normal supply and demand rules mean price has to come down.

As resources go, estate agency services
is not scarce.

Twenty years ago, there were
just as many insurance brokers on the High Street as Estate Agents .. where are
they now? Gone – because of the internet.

Twenty years ago, every third
shop was a travel agents on the High Street – not many now. All online.

Twenty years ago, Video rental
shops were opening faster than a fast thing … Blockbuster had over 250 shops –
not anymore – its all online.

Estate Agency is not immune from these
pressures – wake up before its too late. With the internet and the beast we have
created, that beast being called … Rightmove. This beast has created a level
playing field for all agents.

Any kitchen table estate agent (posh
word for online agent) with £1,300 a month can get membership to a club (called
Rightmove) and play on an equal footing with established, multi officed, multi
award winning, highly trained, long established agents who have been around
since 2BC. You agents even had the chance to kill the Rightmove monster with
Agents Mutual, but most of you sat on the fence waiting for other agents to
jump in first, so you could follow .. problem is, everyone was waiting for
everyone else to jump first – so nobody jumped.

Now you don’t need the resources of a
High Street office and a wage bill that would make South American 1970’s
Dictator wince … just a kitchen table, £1,300 a month, a car, a printer, a few
for sale boards and a laptop and you can call yourself an estate agent. Look at
all the City investors pouring millions into every online agent offering.

So we are all doomed to Purplebricks
then? Err No .. not if you don’t want to
be.

The Author

Hello, my name is Christopher Watkin from Grantham in Lincolnshire.

This blog are some of my thoughts on the systems I have adopted, adapted and improved to organically grow estate and lettings agency's by at least 20% to 30% per year. (you will say what is the catch - hard work and persistence)